California Business Succession Planning Lawyers    

Firm in Santa Cruz handles succession planning for closely held and family businesses       

There comes a time in all of our lives when we’re ready to step aside and pass the baton to the next generation. When you own the company, especially if you’ve built it, orchestrating your exit can be much more complicated. At Penrose Chun & Gorman LLP, our California business succession planning lawyers understand the challenges facing closely held and family-owned enterprises. We provide trustworthy guidance based on extensive experience, so you can engineer a smooth transition to the next generation of leadership.

Why have a business succession plan?

When you own a business, you have options. You can sell the whole operation, or dissolve the company and sell off the assets. But if you want to retain some connection to the business or if you want to pass the business on to family members, you should put a plan in place.

Important reasons to have a plan include:

  • Time to train your replacement
  • Time for your clients to adjust to new leadership
  • Time to settle competing interests within your organization and/or family
  • Insurance in the event in case you are suddenly unable to carry out your duties

As part of your overall retirement program, an estate planning attorney at our firm can design a succession timeline that allows you to transfer responsibilities and ownership over time and to remain as active in retirement as you wish. If your plan requires a sale of facilities, our Santa Cruz real estate law firm is well positioned to help.

What businesses often benefit from a succession plan?

Virtually any closely held business can benefit from a succession plan. Whether the company is a sole proprietorship, LLC, general partnership or limited partnership, establishing a clear process, with timelines and benchmarks, can make the transition easier.

Our firm has helped various types of businesses as diverse as farming operations, real estate holding companies, and timber operations. If you care about stability, continuity and client retention, a succession plan is essential.

The primary components of a good succession plan

For small businesses, the important components of a business succession plan include:  

  • Strategic plan — Anyone coming in to run the business should understand the short- and long-term goals of the organization.
  • Choice of successor — Arriving at the best candidate often means separating sentiment from practicalities. Objective discernment is an important part of the process.
  • Financial plan — A complete valuation of the business must be made. An incoming owner might not be in a position to buy the business outright. For tax purposes, the owner might also prefer income during retirement rather than a lump sum. Structuring the financial transaction can be complicated.
  • Transition timetable — New leadership and existing clients generally need time to get comfortable with each other before the principal exits.
  • Ownership and governance structure — In family businesses, the departing owner might want several children to share the benefits of the business. Ownership rights and decision-making authority must be clearly articulated in the plan.

Our attorneys draw on decades of experience to design comprehensive business succession plans suited to your individual circumstances.

Initiating and modifying a succession plan in California

If you make a plan in advance, it’s important to adjust it occasionally in response to life-changing events, such as:

  • The premature death or incapacity of a principal
  • A principal’s divorce
  • The unavailability of the chosen successor

You might also want to adjust the ownership structure based on events affecting your heirs, such as a death, marriage, divorce or birth of a child.                                        

Contact a skillful business succession planner to schedule an appointment

Penrose Chun & Gorman LLP in Santa Cruz designs succession plans for small businesses throughout California. To speak to a qualified attorney, please call 831-515-3344 or contact us online to schedule a consultation. 

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